What happened to the amounts of foreign currencies supplied by foreign residents when the foreign prices of exports for US firms increased substantially? Concept introduction: A fall in the exchange rate is known as depreciation in the exchange rate (or devaluation in a fixed exchange rate system). It means the currency is worth less compared to other countries. When there is depreciation, and the exchange rate goes down, Exports will be cheaper & Imports will become more expensive e.g. a depreciation of the dollar makes US exports more competitive but raises the cost of importing goods into the US. Therefore there will be an increase in exports and decrease in the quantity of imports. Domestic firms will benefit from increased sales. This may lead to job creation and lower unemployment , especially in export industries. Further, Inflation is also likely to occur following devaluation because: Imports are more expensive − causing cost push inflation, Aggregate Demand is increasing causing demand pull inflation. With exports becoming cheaper, manufacturers may have less incentive to cut costs and become more efficient. Therefore over time, costs may increase.

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Answer 1

Question

Chapter 33, Problem aFCT

To determine

What happened to the amounts of foreign currencies supplied by foreign residents when the foreign prices of exports for US firms increased substantially?

Concept introduction:

A fall in the exchange rate is known as depreciation in the exchange rate (or devaluation in a fixed exchange rate system). It means the currency is worth less compared to other countries. When there is depreciation, and the exchange rate goes down, Exports will be cheaper & Imports will become more expensive e.g. a depreciation of the dollar makes US exports more competitive but raises the cost of importing goods into the US. Therefore there will be an increase in exports and decrease in the quantity of imports.

Domestic firms will benefit from increased sales. This may lead to job creation and lower unemployment, especially in export industries. Further, Inflation is also likely to occur following devaluation because: Imports are more expensive − causing cost push inflation, Aggregate Demand is increasing causing demand pull inflation. With exports becoming cheaper, manufacturers may have less incentive to cut costs and become more efficient. Therefore over time, costs may increase.

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Answer 2

Question

Chapter 33, Problem aFCT

To determine

What happened to the amounts of foreign currencies supplied by foreign residents when the foreign prices of exports for US firms increased substantially?

Concept introduction:

A fall in the exchange rate is known as depreciation in the exchange rate (or devaluation in a fixed exchange rate system). It means the currency is worth less compared to other countries. When there is depreciation, and the exchange rate goes down, Exports will be cheaper & Imports will become more expensive e.g. a depreciation of the dollar makes US exports more competitive but raises the cost of importing goods into the US. Therefore there will be an increase in exports and decrease in the quantity of imports.

Domestic firms will benefit from increased sales. This may lead to job creation and lower unemployment, especially in export industries. Further, Inflation is also likely to occur following devaluation because: Imports are more expensive − causing cost push inflation, Aggregate Demand is increasing causing demand pull inflation. With exports becoming cheaper, manufacturers may have less incentive to cut costs and become more efficient. Therefore over time, costs may increase.

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Answer 3

Question

Chapter 33, Problem aFCT

To determine

What happened to the amounts of foreign currencies supplied by foreign residents when the foreign prices of exports for US firms increased substantially?

Concept introduction:

A fall in the exchange rate is known as depreciation in the exchange rate (or devaluation in a fixed exchange rate system). It means the currency is worth less compared to other countries. When there is depreciation, and the exchange rate goes down, Exports will be cheaper & Imports will become more expensive e.g. a depreciation of the dollar makes US exports more competitive but raises the cost of importing goods into the US. Therefore there will be an increase in exports and decrease in the quantity of imports.

Domestic firms will benefit from increased sales. This may lead to job creation and lower unemployment, especially in export industries. Further, Inflation is also likely to occur following devaluation because: Imports are more expensive − causing cost push inflation, Aggregate Demand is increasing causing demand pull inflation. With exports becoming cheaper, manufacturers may have less incentive to cut costs and become more efficient. Therefore over time, costs may increase.

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Answer 4

Question

Chapter 33, Problem aFCT

To determine

What happened to the amounts of foreign currencies supplied by foreign residents when the foreign prices of exports for US firms increased substantially?

Concept introduction:

A fall in the exchange rate is known as depreciation in the exchange rate (or devaluation in a fixed exchange rate system). It means the currency is worth less compared to other countries. When there is depreciation, and the exchange rate goes down, Exports will be cheaper & Imports will become more expensive e.g. a depreciation of the dollar makes US exports more competitive but raises the cost of importing goods into the US. Therefore there will be an increase in exports and decrease in the quantity of imports.

Domestic firms will benefit from increased sales. This may lead to job creation and lower unemployment, especially in export industries. Further, Inflation is also likely to occur following devaluation because: Imports are more expensive − causing cost push inflation, Aggregate Demand is increasing causing demand pull inflation. With exports becoming cheaper, manufacturers may have less incentive to cut costs and become more efficient. Therefore over time, costs may increase.

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Answer 5

Chapter 33, Problem aFCT

To determine

What happened to the amounts of foreign currencies supplied by foreign residents when the foreign prices of exports for US firms increased substantially?

Concept introduction:

A fall in the exchange rate is known as depreciation in the exchange rate (or devaluation in a fixed exchange rate system). It means the currency is worth less compared to other countries. When there is depreciation, and the exchange rate goes down, Exports will be cheaper & Imports will become more expensive e.g. a depreciation of the dollar makes US exports more competitive but raises the cost of importing goods into the US. Therefore there will be an increase in exports and decrease in the quantity of imports.

Domestic firms will benefit from increased sales. This may lead to job creation and lower unemployment, especially in export industries. Further, Inflation is also likely to occur following devaluation because: Imports are more expensive − causing cost push inflation, Aggregate Demand is increasing causing demand pull inflation. With exports becoming cheaper, manufacturers may have less incentive to cut costs and become more efficient. Therefore over time, costs may increase.

Answer 6

Chapter 33, Problem aFCT

To determine

What happened to the amounts of foreign currencies supplied by foreign residents when the foreign prices of exports for US firms increased substantially?

Concept introduction:

A fall in the exchange rate is known as depreciation in the exchange rate (or devaluation in a fixed exchange rate system). It means the currency is worth less compared to other countries. When there is depreciation, and the exchange rate goes down, Exports will be cheaper & Imports will become more expensive e.g. a depreciation of the dollar makes US exports more competitive but raises the cost of importing goods into the US. Therefore there will be an increase in exports and decrease in the quantity of imports.

Domestic firms will benefit from increased sales. This may lead to job creation and lower unemployment, especially in export industries. Further, Inflation is also likely to occur following devaluation because: Imports are more expensive − causing cost push inflation, Aggregate Demand is increasing causing demand pull inflation. With exports becoming cheaper, manufacturers may have less incentive to cut costs and become more efficient. Therefore over time, costs may increase.

Answer 7

Chapter 33, Problem aFCT

To determine

What happened to the amounts of foreign currencies supplied by foreign residents when the foreign prices of exports for US firms increased substantially?

Concept introduction:

A fall in the exchange rate is known as depreciation in the exchange rate (or devaluation in a fixed exchange rate system). It means the currency is worth less compared to other countries. When there is depreciation, and the exchange rate goes down, Exports will be cheaper & Imports will become more expensive e.g. a depreciation of the dollar makes US exports more competitive but raises the cost of importing goods into the US. Therefore there will be an increase in exports and decrease in the quantity of imports.

Domestic firms will benefit from increased sales. This may lead to job creation and lower unemployment, especially in export industries. Further, Inflation is also likely to occur following devaluation because: Imports are more expensive − causing cost push inflation, Aggregate Demand is increasing causing demand pull inflation. With exports becoming cheaper, manufacturers may have less incentive to cut costs and become more efficient. Therefore over time, costs may increase.

Answer 8

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Answer 11

Ch. 33 - Prob. 33.1LO Ch. 33 - Prob. 33.2LO Ch. 33 - Prob. 33.3LO Ch. 33 - Prob. 33.4LO Ch. 33 - Prob. aFCT Ch. 33 - Prob. bFCT Ch. 33 - Prob. 1CTQ Ch. 33 - Prob. 2CTQ Ch. 33 - Prob. 1FCT Ch. 33 - Prob. 2FCT

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